Free Trade Doesn't Work #4

More from Ian Fleming’s, “Free Trade Doesn’t Work”. Woodrow Wilson was the first modern President to pursue Free Trade. Free trade was number three in his fourteen points for peace after WWI. In addition to income taxation, he was able to reduce tariffs but congress raised tariffs back up in 1921 leading to the roaring 20’s. McCain, in his Presidential bid said that ‘every time the US has practiced protectionism we’ve paid a heavy price for it’. Stating that the Great Depression was caused in part by protectionism. Milton Friedman states that the Depression’s cause was monetary and trade policy was not involved.

Trade tariffs began to come down for good in 1934 with Cordell Hull believing that Free Trade would bring world peace. In so doing, congress unconstitutionally ceded control over tariffs to the President. Article I, Section 8: “Congress shall have power to lay and collect Taxes, Duties, Imposts and Excises (and) to regulate Commerce with foreign Nations”. FDR turned the task over to mid-level officials from the State Dept and other government departments, including people who did not require congressional confirmation. Thus, Free Traders have worked ever since to keep tariffs out of the hands of experts, insulated from democratic accountability. The Executive is highly subject to interest-group politics and operates behind closed doors. And, the Executive, unconstitutionally, continues to manage our foreign trade in 2010.

After WWII the US, in taking the mantle of Free Trade from the British, began, in 1947 to reduce tariffs by some 35% on average. A strategy, using foreign trade as a foreign policy tool, to support world economies in the face of Communism. By 1953, the US became the only major market open to trade; all the others were small, poor, protected, socialist or communist.

At the time it wasn’t that we believed so much in free trade but that America was, comparably, so strong that it made little difference. Harry Truman: “American labor can now produce so much more than low-priced foreign labor in a given day’s work that our workingmen need no longer fear, as they were justified in fearing the past, the competition of foreign workers”. Wasn’t a problem for 15 years or so.

The early 1960s was the time American should have turned back from Free Trade. But, John Kennedy’s tariff cuts sealed the deal for Free Traders. John Gailbraith bluntly told President Johnson in 1964 that “if we are screwed on tariffs, this will have an enduringly adverse effect on the balance of payments. It will be a serious problem for years to come.”

Couldn’t have been more right. In the 60’s black-and-white television production left for Japan. So did cameras, transistor radios and toys. Our trade went into deficit in 1971 and we have not run a surplus since 1975. The few protectionists industries didn’t cooperate with organized labor and so it went. Senator Hollings (D-SC) tried twice with protectionist bills which were shot down by Johnson and Carter. Regan vetoed two protectionist bills and H. W. Bush vetoed one. It seems that, just like wilderbeast, politicians feel safer running with the herd. If one takes pause he is seen as weak and soon cut down.

Ian writes that no one in Japan believes their success is due to free trade. From economic historian Kozo Yamamura: “Protection from foreign competition was probably the most important incentive to domestic development –." All SE Asian nations, including China have developed as Free Trader’s with strong protectionism for certain products. Chinese industry is over 30% state owned with over a dozen ‘strategic’ industries under tight government ownership and control, including IT, telcom, shipping, civil aviation and steel. Seoul has just backed out of a Free Trade agreement with the US and Japan appears to be on the fence regarding a Trans Pacific Partnership trade agreement. It would be difficult for them to turn to Free Trade, for example when they have a 778% tariff on imported rice. Japan has been good at implementing their ‘flying geese’ strategy. Japan breaks into an industry, wipes out existing Western competitors, then hands the industry down to less sophisticated neighboring economies such as Korea, Taiwan, Thailand, Malaysia, and Vietnam as they mature. A form of ‘rational’ protectionism where trade is dynamic and doesn’t require defending every job and every industry.
Ian relates that the benefits from free trade are negligible. Paul Krugman, a free trader himself, writes on this as the ‘dirty little secret’ of free trade. In 2005 the Global Trade Analysis project reported that abolishing all remaining restrictions among on trade among all nations is only $84 billion dollars, less than the annual sales of CVS. `

There was the economic adviser who said “It doesn’t matter whether American exports computer chips, potato chips, or poke chips. They’re all just chips”. A free trade concept that misses the mark. A better approach is exemplified in the RAM chip market. For Japan the RAM chip is the lynch-pin for their semiconductor industry. Their RAM is the best-selling device, generates revenue and long production runs which facilitates managers to test, stabilize and refine the production and quality control processes. The latest technology has always been incorporated first in RAMs, whih have always been the first product to appear as a new generation. Once refined, new generations of other products would follow. The Japanese knew if they controlled RAMs, that would be a long step toward dominance in other semiconductors, which would lead to computers, etc.

Conversely, the US is losing the position in semiconductors it built up with past industrial policy. In 2009, North America received only 21% of the world’s investment in semiconductor capital equipment, compared to 64% going to China, Japan, South Korea, and Taiwan. The US position in photolithographic steppers, important to printed circuit board mfctr, is less than 10%, down from 90% in 1980. There isn’t one single vertically integrated N. Am. PCB shop that could independently supply a circuit board. Almost every shop stays in business supported solely by revenues from ‘brokering’ Asian boards.

Ian writes that Free Trade and the absence of deliberate industrial policy are not neutral choices, free of gov’t interference; they are positive strategic bets in their right, which will only pay off if the underlying assumption that pure free markets are always best. Taking an ideological stand against ‘central planning’, ‘socialism’, or ‘gov’t picking winners’ misunderstands the role that federal support should play. I, as an advocate for a populist, centrist government, understand that.

Ian writes that as a result of neglect of industrial policy, there is a starvation of basic and applied research in areas such as biocomputing, computer architecture, software, optoelectronics, aeronautics, advanced materials, factory automation, sensors, energy conversion and storage, nanomanufacturing, and robotics, saying the US will pay a serious price for this in the decades ahead.

Roy,
With every nation trying to build the same product at cheaper and cheaper prices it will be a long time before the Corporate World enjoys the benefits of Free Trade; however, for the Simple Human the current system in place offers some benefits that until now has gone unexplored.

For example, Are you aware that with the internet one can contact the grower of coffee beans and purchase them directly from those who pick them? In fact, I would be willing to think that almost any food item you wanted could be bought directly from the farm and dilivered to your home in just a few days without the high cost of the Middle Man.

Yes, Free Trade may make it hard for Corporations to compete given their expensive overhead; nevertheless, I do believe with a little work and the help of some teenagers we could enjoy getting most of the items we want from anywhere in the world from the person who actually makes the products and not those Marketers who would like to keep raising the prices in order to keep paying their CEOs higher and higher bonuses.

So while free trade may not work for those citizens who believe in increasing the wages of labor and Management. I do believe with a little bit of innovation the Consumer can enjoy the bemefits of Free Trade with the worlds bakers, buthers, candlstick makers, etc.. Thus, I have to ask how many Middle Men does it take to get a coffee bean from the tree to the cup in the 21st Century under the Free Trade Agreements?

Henry, Free Trade is a great misnomer. About 10% of trade is real ‘free trade’ while 90% is what you can get away with.
Henry, get your priorities straight. Appreciate you being able to cut out the middle man but, we are on the edge of a world disaster, a world depression. China, Japan, Korea and others rattling their swords, the PIGS going down for the count, the US dead in the water with debt that can never be paid off, We can’t take much more ‘free trade’

If we stay at it we will lose more mfctring and high end technology. We are still enjoying the dregs of technology from investments we made in innovation during the cold war years. The US is no longer the leader in high tech innovation and at some point our defense system will depend on foreign nations to provide our war fighting materials. China gets mad at Japan, withholds rare earth materials used in producing our missle pointing systems, etc.

That’s the thrust of continuing free trade, Henry.

Then there’s the sovereign issue. Constitution says that congress is to run commerce but they bounced it to the Executive leading to trade agreements regulated by the WTO, again violalting constitutional law. These trade agreements take precedence over national, state and local laws whenever a trade angle can be found. Some examples of so-called trade barriers successfully challenged under WTO: U.S. Marine Mammal Protection Act of 1972, several laws conserving fish resources and Thai cigarette limitations. Currently under challenge: the US fuel economy standards, the US gas guzzler tax and the EU ban on the use of growth hormones in beef. Threats have been made against restrictions on drift net fishing the the US, export bans on raw logs in Indonesia, the Philippines and the US, the US 1990 Consumer Education and Nutrition Food Labeling Act, Calif’s proposition 65, which requires labeling of carcinogens, German packaging recyling laws and the recycling laws of several US states, The Pelly Amendment, which enforces a ban on commercial whaling, and on and on…

The US was forced, in 1996 to weaken Clean Air Act rules on gasoline contaminants in response to a challenge by Venez and Brazil. In 98 we weakened the Endangered Species Act protections for sea turtles to a challenge by India, Malaysia, Pakistan and Thailand concerning the shrimp industry, etc.

Free Trade has never worked, doesnt’ work and will never work. But, politicians are like migrating animals in the sense that they feel more secure running with the herd and if one does stop to complain he will be quickly taken out. When G.H.W. Bush announced finalization of the NAFTA text in 1992, he trumpeted this ‘achievement’, but was so afraid of public reaction to the details that he would not release the text until after he had left office. But, the corpocracy marches on under the banner of free trade.

I watched the Dallas FED chair on cspan saying that with the $600B quantative easing the FED was at the ‘end of their rope’ and that congress must now take action to move the country forward. Wish us luck on that.

Roy,
Congress can pass all the laws they want and the Fed can try to keep the Prime Interest Rate at zero; however, IMHO until the Barons and Consumers can decide on just how far they are going to go to change the Standard of Living in America and around the world than no amount of trading is going to help.

Yes, America can influence Free Trade by creating a Standard of Living well beyond the ideas of Labor and Management; nevertheless, until the Adults in the Room realize that the Children of the 21st Century can produce goods that will lower or eliminate Monthly Bills and add positively to their gross income than how many screwdrivers and hammers does the world need?

Henry, I think it’s more about the ‘new world order’ than it is about our standard of living. And, that is being shaped, not in our living rooms by family debate, but by the likes of:
“We are grateful to the Washington Post, the New York Times, Time Magazine, and other great publications whose directors have attended our meetings and respected the promises of discretion for almost forty years. It would have been impossible for us to develop our plan for the world if we had been subject to the bright lights of publicity during those years. But the world is now more sophisticated and prepared to march towards a world-government. The supranational sovereignty of an intellectual elite and world bankers is surely preferable to the National auto-determination practiced in past centuries.” - David Rockefeller, in an address to the Trilateral Commission meeting, year 1991.
And, good ole George is helping to speed things along:http://www.discoverthenetworks.org/viewSubCategory.asp?id=589http://www.jeremiahproject.com/newworldorder/index.html
We can all agree the world is highly complex environment as it pertains to humanity. All actions are primarily driven by the fact that nuclear weapons are available to so many countries, many deemed without the respect for humanity required for one who holds their finger on the trigger. Example: Cuban blockade. The US began lobbing depth charges to force a Soviet sub to surface for inspection. Kruschev had given subs carrying nuclear weapons the order to fire if fired upon but the Soviet sub captain couldn’t do it, chose to surface for inspection. Close enuff!!
We can all agree world peace is highly desirable. And, IMO, that is a real good reason not to have rushed headlong into a ‘new world order’. For instance, China worked to get nuclear technology to Pakistan, Iran, Libya and N. Kor. Reason has to be that they would hope a middle eastern nation would drop a nuke on the US or an ally. Any other reason you can think of is just more insane yet. China can bleed us down by keeping troops all over the middle east to contain the potential for a nuclear war.
Big problem, yes, but for sure no reason to promote China to #1 and make plans for a one world government. Far better to take a measured approach to leveling the playing field, IMO. For instance, this plan to weaken the US as a world player so that other countries can develop faster seems highly irrational, dangerous. The Corpocracy is thinking that we just need a major crisis to generate a clamor leading to a new world currency, which would lead to a further diminished status for the US on the world stage. And, on a national or sovereign basis, the people of the US are not supportive of a world governing body, still clinging to our guns, religion and Constitution. Super arrogant by the elites who think otherwise. But, since when has the Corpocracy listened to the people?
IMO, the world situation is near critical and a strong US superpower presence is the best security the world could achieve at this time. Somebody needs to be able to tell China that giving the bomb to Iraq, Afghan, and others won’t be tolerated. Not sure how that would work if we can’t even convince China to stop currency manipulation, etc. And, who will stand up for Tibet? http://www.friends-of-tibet.org.nz/occu.html If China can lay claim to countries they ruled over a 1k years ago could Russia not expect to do the same, etc? Who will stand up for Africa in trying to contain the hordes from the North, chopping em up with machetes as they march southward, and so on… Do we expect China to sit on their cash in perpetuity or will they decide to fill the power vacuum we are intentionally creating? Do you think China is ready for that? Are you ready for that?
IMO, we should hold those who brought us to this situation accountable for their actions over the last 30 years or so.
Otherwise, we deserve the Corpocracy we have.

The American standard of living has been a product of massive consumer debt for several decades now. Beginning right after the standard of living was subjected to an extended period of double digit inflation. Wage increases were replaced by easy credit (financialization of the economy) as the means for maintaining the standard of living. Does anyone think this is sustainable.

The Chinese economy is now the second largest in the world. In the 1800’s, the Chinese economy was the second largest in the world. China’s economy is growing rapidly, but so is it’s inflation and worker unrest.

Free trade is an idea, that has never been a reality. It will likely never be a reality for as long as there are nations.

Agree jlw, and the reason for credit cards and easy money was to delude the US consumer into believing that, even as the US was starting to decline, this free trade/globalization thing was just going to be great. And, it appears most sucked it up and those that didn’t had not voice, still don’t, few seem to give a damn that in the short span of 30 years we went from the wealthiest nation to the greatest debtor nation in the world. Well, it ain’t just fine with me, etc.

Free trade works great for all of the foreign nations with trade agreements that let them export to the U.S., but let them get away without importing anything from the U.S. (resulting in millions of jobs and manufacturing leaving the U.S.).

The federal government and most (if not all) greedy, arrogant, and corrupt incumbent politicians in Congress have been selling out Americans for many decades.

But the American citizens are culpable too, when they continue to repeatedly reward those same greedy, arrogant, and corrupt incumbent politicians with perpetual re-election.

If American citizens don’t like the myriad of unfair and one-sided trade deals designed primarily to increase profits for some greedy people who will exploit anyone and anything for a profit, then perhaps they should stop repeatedly rewarding the incumbent politicians (that vote for those trade deals) with re-election?

Well, let’s ask some questions about globalization and the economy that the main stream media and few (if any) in the federal government want to answer:

(01) How is free trade “fair” when other exporting nations openly manipulate their currencies, pour massive subsidies into their national industries, and impose massive tariffs against many U.S. goods? Why do we allow that? Why do we allow them to wipe out many of our industries while U.S. dollars pour out of the nation? Cheap products may not be so cheap after all, if most of that money (and jobs too) is leaving the nation?

(02) How is it good for American workers’ wages to decline as more and more jobs leave the nation? How can American workers ever compete with extremely cheap labor (e.g. $10 per day on average in China with a population of 1.3 billion)?

(03) As millions of manufacturing jobs continue to flow to where “labor is cheaper”, how are we going to provide nearly enough jobs for blue collar American workers? A nation can’t only consume. It must produce also. And again, so many imports and so few exports means that billions (perhaps trillions) are leaving the nation, annually.

(04) If there aren’t enough jobs for everyone, then tens of millions of Americans will not be able to take care of themselves. Already, over 41 million (13%) Americans are on food stamps. One way or another, we are likely to pay some price to take care, or not take care of American workers. We can’t all live on welfare. Are you willing to have your taxes raised substantially to pay for all of the welfare cases that “free trade” is creating? There will probably be a revolution if things deteriorate to that level.

(05) As U.S. workers are merged into the new global labor pool, wages continue to decline and umemployment remains high. How will wages and the standard of living not be forced ever lower? And there is also a massive liquidation in progress. Foreign-owned assets have skyrocketed into the tens of trillions of dollars.

(06) What about China that is rapidly becoming an environmental wasteland and where millions of people work in horrific conditions for what is essentially slave labor pay?

(07) The House National Security Oversight Subcommittee recently heard testimony that the rapid decline of manufacturing in the United States has resulted in America losing its edge in numerous industries that are absolutely vital to national security? What’s good about that?

(08) The United States spends $40-to-$50 Billion more on goods and services from the rest of the world each month than on goods and services from ourselves. That means that $40-to-$50 billion dollars are leaving the nation every month. How is that good for the U.S. economy?

(09) Over the past 2 or 3 decades, China has been able to accumulate approximately $2.5 trillion in foreign currency reserves, and the U.S. government now owes them close to $900 billion dollars. U.S. Government officials then beg China to continue to lend the U.S. money. This may have never occurred had it not been for the insane trade policies of the last several decades. So why do many federal incumbent politicians continue to advocate for more “unfair” trade policies?

(10) None of the above came about by mere accident or coincidence. It is only one of the abuses on this list of 10 major abuses that are used to exploit, cheat, and steal from the majority of people (who permit it due to ignorance, apathy, laziness, and misplaced loyalties).

At any rate, the majority of voters have the government that they elect, and re-elect, … , and re-elect, at least, possibly, until repeatedly rewarding failure, repeatedly rewarding the duopoly, and repeatedly rewarding FOR-SALE, incompetent, arrogant, and corrupt incumbent politicians in Congress with 90% re-election rates finally becomes too painful.

Well said d.a.n. and your #10 rings clear as a bell. I’m reminded that this week the County Executive of Pr. Georges County, Md. was arrested by the FBI for political corruption. Jack Johnson and his wife, both on the country payroll were taken into custody as she flushed an incriminating check for $100k down the toilet and was found with $79,600 stashed in her bra.

In 2006 the Wash. Post reported that 15 friends and political allies of the Johnson’s had received 51 country contracts worth nearly $3.3M.

The FBI suggests this is the tip of the iceberg with more to come. Similar investigations were conducted in 1960, 1980, 1992, 2005 and 2008. Pay for play has been going on in that area of Maryland forever. Residents were aware, laws were passed to prevent abuse but it has continued.

So, when you write that the voter s are “repeatedly rewarding FOR-SALE, incompetent, arrogant, and corrupt incumbent politicians in Congress with 90% re-election rates” you are about 100% right.
We can, and should expect much better performance from elected officials.

We can, and should vote the incumbent crowd from office come 2012. Politicians have delivered us to where we are today as a nation and we can, and should hold them accountable for their actions or inactions as the case may be.

We can, and should support the movement for getting Article Five Convention before the public. With sufficient support we can force congress and the courts to accept what the Founder’s declared and stop their violation of this Constitutional right for the people. Highly likely that the first proposal by the people for AVC would be for a balanced budget amendment. Something we will never get through the Corpocracy and is sorely needed at this time in our history.

We can, and should support a new 3rd party with a different political attitude. A centrist party established in rules to prevent co-option by the money influence. A party that can vote to reject party members who become elected to office and act as the Johnson fellow. A party that will go back in time and correct some wrongful actions such as corporate personhood law and money is free speech law, implement real campaign finance where all voters contribute to one account which is then disbursed to viable candidates/parties. The list should include stabilizing our currency by pegging the dollar to gold and implementing a flat tax where politicians can no longer manipulate the tax code to their or their cronies benefit.

JLW,
It is sad to think no one has figured out how to solve the problem by showing these people how to use growing chambers and a pieve of plastic to produce food and water.

You would think for a $1.095 Trillion Dollars ($1.00 x 3 billion)and the fact Spaxe Exploration will require the technology some institution 40 years ago could have made one by now.

Yet, stuck with the idea that food only grows in the ground and water only comes from wells I guess it will take someone in the 21st Century to build a ‘Magical Box” that can grow food and produce water out of thin air before Corporations will buy the idea. And if history is any lesson the 3 billion Humans still will have to wait before they can own a growing chamber and a piece of plastic.

jlw wrote: Nearly half of the human population, 3 billion people, live on less than two dollars per day. Their lifestyle is a daily quest for food and clean water.

Henry wrote: Yet, stuck with the idea that food only grows in the ground and water only comes from wells …

Sad isn’t it?

The current world-wide human population is 6.7 billion.

But, with the world-wide human population growing by 211,000 per day (that is all births per day minus all deaths per day), there’s obviously one thing that humans do quite well.

How smart is that?

Especially when about 36,000 (or more; most likely a conservative number) die every day (on average) from starvation?

And in many of those nations where these people are starving to death, what is the common-thread? Rampant government corruption, greed, crime, and no real voting rights.

If Americans aren’t careful, it could possibly crumble and deteriorate too.

While we’re not nearly as bad off as most nations, there’s a log of room for improvement, and we should be careful that we don’t arrogantly believe that things can’t deteriorate to the point that rampant chaos, crime, greed, anarchy, or worse become the norm.

At any rate, the majority of voters have the government that they elect, and re-elect, … , and re-elect, at least, possibly, until repeatedly rewarding failure, repeatedly rewarding the duopoly, and repeatedly rewarding FOR-SALE, incompetent, arrogant, and corrupt incumbent politicians in Congress with 90% re-election rates finally becomes too painful.

Henry, we can’t solve their problems, but we could do a much better job of helping them solve the problems.

Dan has pointed out many of the causes that work against problem solving. I would add apathy, indifference and a sense of helpless to the equation.

For as much as we Americans love our lifestyles, our way of life, many of us are starting to realize it is not sustainable and not an ideal lifestyle for the future. This does not mean we have to take a ax to our lifestyle. It just means we have to be more aware and more willing to cooperate in making our lifestyles more sustainable. One example is food, we Americans are notorious for wasting food. We send many millions of tons of food to the landfills every year. We encourage waste and gorging for our comedic enjoyment, food fights, punkin chucking, man v food, etc.

There has always been the few who would run the world for their own power and or profit. They will continue to do so for as long as the rest of us are willing to go along for the ride.

I am not advocating socialism or communism over capitalism. They all have the same problem, those who seek power and wealth migrate to the places of power and run them supposedly for the good of all, but especially for their own self-interests, while the rest of us apathetically go along to get along. This attitude is enhanced with much propaganda and advertising.

Many of us will argue that propaganda and advertising do not sway us but the evidence doesn’t agree. We complain mightily about our government but we keep electing the same people. We buy and buy stuff that we may never need or use, so much that we have created a huge business opportunity in extra storage space. Now a new reality show, storage space auctions.

JLW,
Although Dan is correct the part he is leaving out has to do IMHO more with Generational Change than it does about God Guys and Bad Guys.

For example; we knew about growing chambers and extracting water out of the air 40 years ago; however, unable even today to show how such simple solutions can be used by the masses to increase personal health and wealth it seems that the idea has never became popular. No, instead we fell into the idea that Corporations could grow, can, and sell us the food we need to make are life easier. And the same can be said about water.

Nevertheless, looking forward one could make the argument it is better to have local food sources such as a walkin pantry capable of growing fresh food. And though it will have to take the same course as herb gardens in the home plus the Chefs of America and Humanity promoting the idea. From an Individual Point of View I do believe growing your own food is better.

Nonetheless, looking at the same problem from a Corporate Point of View how would promotong the growing of Home Corps help the bottom line of business? And what about the times when the Home Source cannot support the Family demand since lower demand would lead to higher costs and less profit for the Shareholders of the Corporation?

No, 30-40 years ago we instructed Americas’ Democratic and Republican Civil, Political, and Religious Leaders to allow the Status Quo of the 20th Century to continue. And though today the problem has become a matter of National Security, I see no movement by the Left or Right in Society to address one of the leading causes for the so-called War on Terror.

So where is the Community Leadership right now on the idea of promoting Home Grown Food. For though the First Lady has been working the public pulpit drumming up support, I have not heard of even a local garden club who has followed her lead. Thus, we can xolve the problem of hunger here in America and around the world; nonetheless, if we are waiting on the Corporate World and their politicians to address the issue than we need to allow the Generational Change of Today to instruct Americas’ Democratic and Republican Civil, political, and Religious Leaders to do just that.

And as a side note to both Dan and Roy. It is not Good verses Bad, but who is hunger verses who is well feed which will settle the argument of nations. For I wonder how many Happy Meals it would take to make even the most agressive Human in places like Somalia to surrender to Knowledge and Wisdom.

Roy, what Ian misses is the decades of prosperity America enjoyed as a consequence of Free Trade which grew foreign markets and foreign middle class consumers of American innovation and production, from post WWII through the 1980’s.

Free Trade created export markets for the U.S. during those decades. Of course, inevitably, growing foreign production and middle class consumers would result in the eventual tipping point we now experience, where the Chinese can produce and sell Chinese cars to Chinese consumers cheaper than the U.S. could export them, even if the Chinese government were to drop their auto import tariffs.

ALL policies, economic and political, will outlive their usefullness, as the conditions which gave rise to those policies change those very conditions over time. Ian seems to miss this structural Yin and Yang or TAO balancing pendulum in the area of economic and political policies.

The issue is not whether free trade was good policy for the U.S., because it clearly was for decades. The issue is what was going to be America’s game plan for when that pendulum swung in the other direction, making free trade disadvantageous to America and Americans? From Bush 1 through Obama, the answer has been, we will become the world’s innovators and export new and better technological innovation. But, they never sat down and drafted just how that was going to work - presuming that the private sector would take care of that all of its own.

Well, the Private Sector did, but the way our President’s foresaw. American corporations internationalized, and began exporting even the innovation aspects of the solution. This was most pronounced from 1996 onward, enhanced by the Tech Bubble implosion in the U.S. markets.

The U.S. still has closing opportunity to invest in becoming the worlds’ environmental exporter. Emerging economies demand for such innovation is only going to grow by leaps and bounds. Obama has been absolutely correct in his assessment that this where our investment as a nation and economy should be directed. Republicans on the other hand, reject this reality outright denying even the overwhelming evidence of greater environmental degradation and climate change, which the rest of the world is now embracing with both arms as not only valid, but, potentially very lucrative.

jlw writes; “One example is food, we Americans are notorious for wasting food.”

A good example is using food for fuel in our combustion engines. And, the amount of food to be used for fuel is increasing. Stupid. Ignorant. Our world food prices are skyrocketing as a direct results. Idiots.

During the so called post war free trade era, the corporate tax rate was around 70%. Our economy was producing trade surpluses and no one was complaining.

What happened?

We helped rebuild the European and Japanese manufacturing base. The Japanese gave American consumers what they wanted, small economical cars.

Our country moved right and corporations began gaining political power as unions were surrendering power.

The Chinese cannot only produce cars and sell them to their people cheaper than we can export cars, they can sell us cars cheaper than we can manufacture them.

The Chinese aren’t setting on our money, they are investing huge sums of our money in infrastructure, energy, including sustainable energy, and they are loaning us huge amounts of our money to us so we can give them even more of our money.

We are blaming our government, corporations and globalization for letting them do this to us. We didn’t have to take those credit cards, but we did. We didn’t have to buy their stuff on credit, but we did. We didn’t have to rent storage places so we could buy even more stuff to store, but we did.

Sure the corporations and the government encouraged us and made it easier for us, in the name of profit, but we did it to ourselves and it is the same for our government, we did it because we are the government.

It does no good to complain about what the government is doing to us or doing to us on behalf of the corporations and globalization until or unless we the people are willing to check our own greed and self indulgence, while making a common decision to become better, more informed citizens.

jlw, I think we can put the onus on the politicians. Using the analogy of the boss and the worker, relative to the people and the congress, if the worker screws up should he be held accountable or should the boss assume that he didn’t manage the worker properly and therefore the boss is at fault? IMO, both the voters and the politicians are at fault but the politicians should certainly be held accountable. The people are suffering the great recession et al, for their culpability in the process.

The politicians will try every trick in the book in managing their careers. Whatever they can shove off to the Executive, legally or otherwise, they will do, so long as they don’t have to take the heat. The only reason we have a problem with SS and medicare is that the spineless politicians don’t want to risk the careers by taking some actions on correcting same. They prefer to run with the herd, security in numbers, etc. I view politicians very much like the wilderbeasts crossing the river on migration.

IMO, politicians realize mandatory changes with globalization are on the front burner yet each waits for the herd to make a move. Maybe they will sit on their hands until we have a full blown crisis. At that point we should have a 3rd party ready for people to jump on board.

Roy, how can the politicians be held accountable without the voters holding themselves accountable first? How can the partisan voters hold themselves accountable while continuing to hold the party they are not supportive of responsible for what has happened?

Double digit food inflation in China. The sacrifice of jobs by Americans have given the Chinese workers nothing that can’t be taken from them by wealth and power. Inflation is possibly the greatest weapon of wealth and power.

jlw, your entire commentary in #313284 is EXACTLY what Erskine Bowles had to say about how we got here in an interview of himself and Alan Simpson on Bloomberg TV hosted by Charlie Rose.

Fascinating the eminent common sense and total absence of political difference between these men in discussing the deficit and debt crisis now facing us straight ahead.

The more I learn about their prescription for zeroing out deficits, the more I am sold on their strategy, tactics, and approach. And it is simple enough. They provide a balanced no politics plan to zero out the deficit, and anyone who wishes to alter it, must reproduce a zero deficit along with their alteration or amendment, by either raising taxes or cutting spending, for the change to be taken seriously and credulously.

Roy,
“Using the analogy of the boss and the worker, relative to the people and the congress, if the worker screws up should he be held accountable or should the boss assume that he didn’t manage the worker properly and therefore the boss is at fault?”

Who is the Worker and who is the Boss? For why it might be the fact most Americans are looking for their Elected Officials to solve the problems facing America (Democrats and Republicans)I do believing unlike the Tea Party the next national political party needs to bring a hardcore agenda on what exact steps Americans can do to get Congress to move the Nation forward.

RF,
“A good example is using food for fuel in our combustion engines. And, the amount of food to be used for fuel is increasing. Stupid. Ignorant. Our world food prices are skyrocketing as a direct results. Idiots.”

Though using corn right out of the field to make fuel is not smart IMHO the fact many American Businesses are now starting to use their organic waste to feed livestock and power their factories and farms does not add to the increase of food. No, the increase in food prices is caused by the increase cost in production to include fuel and wages. In fact, Americans will be paying even higher prices if Congress cannot do anything to fix immigration.

JLW,
“Inflation is possibly the greatest weapon of wealth and power” Excellent insight and I suppose is why America and the World is in a supply side recession.

David,
Though it has been a long time since you and me debated the debt, I still believe that unless Congress does something to incentivize Young Americans into investing in US Treasury Bonds and Notes that nothing in Washington and on Wall Street will change. For if it is true that the One with the Money makes the Rules than IMHO that group should be The Children of the 21st Century and not the international corporations and countries.

David R., I missed all but the last couple of minutes of that Charlie Rose show and I doubt that what I said was exactly the same as Bowles. I am certain he has a better command of the language. The opinions I expressed came from many sources, I don’t think Bowles or Simpson were sources, but they could have been as my memory has serious deficiencies.

I did see the Rose show featuring Joe Nocera and Bethany Mclean, promoting their book on the sub prime mortgage industry—-All The Devil’s Are Here.

jlw, I didn’t mean to imply and never thought that your comment was obtained from Bowles and Simpson. My reference to ‘Exactly’ was a reference to the message content, not the words they used to extoll the message. My apology if that is how it read, and I see it can be read that way.

I only meant to make the point that what you said and what they said and what I have said independent of each other, arrives at the same historical account as a result of solid information, and the application of logic and reason to that information.

Erskine used different words, but, the historical factors are the same.

Henry, young people will not invest in U.S. Treasuries for the same reason they won’t wear motorcycle helmets and leathers or stop smoking. The future is intangible to young people. Why invest in an intangible future one can scarcely even believe in. Things are so bad in America today economically, it makes no sense for young Americans to invest in this nation’s future and economy 50 years from now. They watch lots of sci-fi movies, and they are nearly all post-apocalyptic. That has a psychological effect on young audiences.

The Good News is that older Americans over 35 are saving a whole lot more and buying down their high interest debt in a manner that could only be fantasized about 3 years ago. That behavior is retarding the economy today, but, if the economy can stay on its legs, all that saving and buying down of debt will open a new door to explosive consumer activity 3 to 6 years from now. Pent up consumer demand is already straining at the bit to unleash itself as holiday spending projection indicators are growing quite bullish. Let’s just hope Americans retain their frugal response after the holidays.

The U.S. and E.U. corporations influence the markets, in particular, the NY and London markets, which set the prices for commodities. The markets set the price below the cost of producing a particular commodity. This conduct is killing the third world producers.

The E.U. and the U.S. use taxpayers dollars to subsidize their producers.

The WTO, controlled by the U.S. and the E.U. refuses to allow the third world countries to subsidize their producers.

The U.S. and the E.U. use their taxpayers dollars to give aid to the third world countries. Aren’t we generous.

The continent of Africa has 1% of the world trade. If their percentage of world trade were to rise to 2%, that would provide Africa with an additional $70 billion, 5 times what Africa receives in foreign aid.

Africa is the only Continent that has became poorer over the last 20 years. This period coincides with the rise of the free traders to power in the U.S. and the E.U. and the rise of anti-Americanism in South America.

jlw said in another article’s comments on WB: “So called free trade is controlled by the powerful.”

To which I replied:

All international trade is controlled by the powerful parties to that trading. It has always been thus, and will always be thus. Free trade refers to nothing more than competitive parties making their best mutual deals amongst themselves.

You are right to state that there is no such thing as free trade, but, you have to qualify it; “with foreign nations by America.”

Free Trade definition: “Free trade is a system of trade policy that allows traders to act and or transact without interference from government.”

But, in America, from its beginning, free trade was abandoned in the U.S. Constitution, article 1, section 10, the Congress shall have the power “To regulate Commerce with foreign Nations, and among the several States,…”

There went free trade upon ratification of the U.S. Constitution.

Given the long history of our corporations and wealthy commercial enterprises being constitutionally forced to work through our government in order to achieve foreign trade benefits, it was only a matter of time before the corporations recognized that it was in their own best collective interest to simply take over the government.

And with the Citizen’s United v. FEC Supreme Court ruling, the last step of that takeover of the government by way of controlling the elections and reelection purses of incumbents and challengers as well as election cycle media advertising, control of government now rests pretty much entirely in the hands of the corporations. The people’s only choice on election day is to choose amongst the candidates which the corporations have presented to the people to choose from.

Obama was supposed to be the exception that proved the rule. But, he turned right around and chose a cabinet of made up of corporate leadership, past or present. No exception in Obama, at all, unfortunately.

jlw, Africa is China’s newest best buddy in the area of trade agreements. Africa’s future prospects are looking brighter with each passing year. As are China’s since, neither the E.U. nor the U.S. can afford to compete with China on these trade agreements with Africa. China has learned how the government subsidy game is played and they are becoming more Westernized in their trade practices with each passing month.

Never in modern civilization has free trade either been adopted by a nation or practiced. Free trade is a government hands off concept. Modern civilization is all about a government hands on trade arrangement.

It is one of the great flaws coming to roost with the philosophical approach of our founding fathers, who abandoned the notion of free trade in our Constitution. That’s not to say they weren’t wise for their day in adopting such abandonment despite the warnings of Adam Smith which came after the writing of the Constitution in Wealth of Nations. But, for modern post 20th century times, the absence of free trade in a global economy has resulted in the corporate takeover of governments by varied means during the 20th century, now coming to completion with corporate control of the media and the electoral candidate selection process and the creation of an election environment in which only the wealthy or wealth connected have a prayer of being elected.

David,
Though I would be slow to agree with you; however, the Youth of today have the opportunity even the Barons of the 1800’s would be taken back. For while I realize the idea of a 3 Giga Watt National Power Grid, a revolutionarie transportation system, and a clean environmnt are foriegn to those over the age of 30. The fact that TODAY “We the Corporation” can build the “Green Products” capable of lowering if not eliminatng most of the family monthly bills and replace them with an additional source of income other than Labor and Management should not be forgotten by the Left or Right.

No, investing in Treasury Notes, Mutal Funds, and even Stocks over the next 10-50 years should be interesting to say the lease; nevertheless, standing on the idea that the 20th Century ideas should be good enough for this generation even though their parents did not feel the same way just 30 years ago. IMHO there sould be a name for that kind of thinking even though th Gentleman inside of me tells me to let it go.

So David while you and I can’t make the Youth of Today and Tomorrow invest in T Notes or the Proper Corprations which can build them the Best World Humanly Possible. Pointing them in the right directioon and given them the Wisdom of what we know does not work might be the greatest thing the Children of the 70’s can do since “I told You So” never seems to work with us.

Henry, quite right. Education is the answer. But, in America, education is now becoming politicized, which is to say, fact and reality and empiricism are being fought over for inclusion in student’s text books. That fact has enormously dangerous potential for the new generation.

I for one, don’t think that a lack of free trade is responsible for corporate takeover of governments. This is not the first time that business has had such power to control our government. The robber barons were doing a rather good job of it until the government was forced to act of face anarchy by it’s citizens.

The robber barons should have given us an insight of what free trade ultimately leads to, monopolization of markets.

With regards to Obama, I believe I am the WatchBlog participant who came closest to evaluating Obama’s potential presidency before he was nominated.

When the left was proclaiming Obama the instrument of change, the right was, of course, labeling him a socialist scourge, I labeled him corpocracy.

For Someone who has recognized the changes that have occurred within the Democratic Party since the Reagan years, I find it hard to believe that anyone could think that Obama and especially the Democrats in Congress would not continue to govern within the bounds of the path that corpocracy influenced government has had this nation on since the Reagan Administration.

With regards to Africa and Chinese investments there, I think it is a matter of the Chinese offering a better deal than the U.S. and the E.U. will rather than can offer. The U.S. and E.U. corporations offer draconian deals that are easy for the Chinese to beat.

The E.U. and U.S. corporations have become far more reliant on the ability to bribe government officials, around the world, and manipulation of trade organizations, to gain advantages; so much so that only a large institution such as the Chinese government can undercut their offers and beat them at their own game in the Third World.

It is a great joy when the N.Y. and London commodities exchanges can set prices below production costs while the U.S. and the E.U. subsidize their producers.

As I stated in another post, greed is deaf, dumb and blind, and in this case, it is the investors of the corpocracy that are deaf, dumb and blind to the realities of this so called free trade movement. Some might be beginning to understand the ramifications that this is having on our middle class, but some of them believe that a reduction in the size of the middle class is a good and necessary thing. Virtually none of the investors are aware of the negative impact this is having on small third world countries, preferring to believe that we are doing them a favor.

IMO, there is very little hope that the people will rise to the occasion and address the power that wealth has to control our government to their advantage short of a complete meltdown of the world economy.

David,
Why the Old Folks and young Ideologists would probably enjoy mothing more than leaving the Unknown Knowledge of Man alone, something tells me that the next generation is not going to be so silent about what they find. For if history is any indicator of what will happen I do believe the next 20-40 years will see more change than the airplane or car has made in the 20th Century.

In fact, wasn’t one of the reasons given in the 60’s and 70’s for lowering education was the fear that the Youth of Today would Know to Much? Now can the Children of the 70’s set aside their fear of Common Knowledge and Common Sense to allow the Children of the 21st Century to build a Government and Society were their political parties do not cater to over protecting Mans’ Ignorance?